Friday, December 01, 2006

Eek! British Airways Does Run The UK!

Motorists should pay at least £1.28 a mile to drive on the country's busiest roads at the height of the rush hour, the Government's transport adviser said in a report published today.

In his long-awaited report, Sir Rod Eddington said that without such a scheme in place by 2015 the taxpayer would face a vast bill for a new highway building programme to cope with the mounting congestion. "For me in the end, road pricing is an economic no-brainer," the former British Airways chief executive said today.

A national road pricing scheme would be worth £28 billion to the economy by 2025 and congestion would be cut by half, which alone would be worth £22 billion.

1. Driving in the rush hour is not harmful behavior - like smoking - to be discouraged by a tax. Modern economies are tightly synchronized - for example BA pilots need to be at Heathrow at a specific time to use a takeoff slot. Penalizing synchronization reduces economic efficiency.

2. Increased taxes do harm. Taking money off commuters and handing it to the government ensures it's moved from its most efficient use (an individual spending their own money on themselves) to the least efficient (government spending other people's money on third parties).

3. Central planning is a terrible alternative to the market. One of the reasons the USSR collapsed was its poor infrastructure - most roads more than 50 miles from Moscow were dirt. Left to themselves, businesses and employees will make efficient decisions to relocate or switch employers when commutes become intolerable. Or they can vote in pols who commit to build more roads.

The good news for Brits is they can now see the future their society - it's BA.